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GM Bankruptcy closer as Bondholders Balk

GM bankruptcy closer as bondholders balk
Robert Snell and David Shepardson / The Detroit News

Detroit -- General Motors Corp. is preparing to file for bankruptcy Monday after unsecured bondholders overwhelmingly rejected an offer to exchange their GM debt for equity in the automaker.
While there is room and a few days left for a last-minute deal, it would be difficult, if not impossible, for GM to shed more than 2,000 dealerships and cut billions in debt outside a court-ordered restructuring, industry experts said Wednesday.
There was no indication that another offer would be made to bondholders, but if an agreement were reached it could spare GM a prolonged, complicated bankruptcy.

GM's board of directors is scheduled to meet late this week to discuss the company's next move in light of the failed bond exchange offer, but it has few options.
No matter the outcome, what was once the largest company in the world, holding more than half of the U.S. auto market in 1962, will end up far smaller, shedding half of its brands, more than a quarter of its U.S. plants and a third of its workers.GM issued weekly paychecks on Tuesday this week, three days early, to reassure nervous employees ahead of a likely bankruptcy. GM workers would continue to get paid during any court restructuring.

The automaker, aided by its primary bankruptcy law firm, Weil, Gotshal & Manges, has been working for months on a plan to shed many of its unprofitable assets in bankruptcy. The government is preparing to lend GM at least $30 billion during bankruptcy and after it emerges from court protection, while the Canadian government also plans to loan GM billions.
GM would likely file its plan under Section 363 of the Chapter 11 bankruptcy code, as did Chrysler LLC.

The law would let the Detroit automaker split into an "Old GM" and a "New GM." The old company would contain unresolved debts and nonperforming assets and remain in bankruptcy court for a prolonged period. The "New GM," consisting of assets such as Cadillac, Chevrolet, GMC and Buick and essential auto plants, could emerge from bankruptcy in a few months.
A person familiar with the matter said President Barack Obama's auto task force expects a GM bankruptcy would be more complex than Chrysler's and take about 60 to 90 days, compared to 30 to 60 days for Auburn Hills-based Chrysler.

Chrysler quickly identified the plants it would shutter and leave behind in bankruptcy. GM hasn't decided what assets it would leave behind or whether it will eliminate more than the 1,100 dealers it has already identified and wants to close by 2010. But the automaker is expected to disclose in a bankruptcy filing the names of the 14 plants it wants to shutter by the end of next year and to outline significant additional salary cuts.

GM also is not likely to immediately disclose plans for its Renaissance Center headquarters in Detroit. The automaker is still considering moving its corporate headquarters to Warren -- a possibility GM disclosed in a briefing with reporters this month. A person familiar with the matter said the Obama auto task force would leave that decision to GM.
U.S. Sen. Carl Levin, D-Detroit, raised the headquarters issue Wednesday in a call with GM CEO Fritz Henderson. Levin opposes a GM move out of Detroit and possibly to Warren, which is wooing GM.

As GM braces for bankruptcy, Obama has yet to sign off on some key decisions, such as how much financing to give the automaker in bankruptcy and when it emerges. The Detroit News reported this week that the task force was expected to grant GM about $30 billion on top of the $19.4 billion in federal loans GM has received so far.
The government also has infused $7.5 billion in General Motors Acceptance Corp. to assure lending to GM dealers and customers, and created a $1.25 billion program to backstop the warranties of GM and Chrysler buyers in bankruptcy.

GM has until Monday's government-imposed deadline to win concessions from bondholders. "The deadline is near but it's not passed yet," White House spokesman Robert Gibbs said Wednesday. "The team continues to work on getting all the stakeholders involved."
Bondholders could be asked to forgive the $27 billion owed to them in exchange for a much larger equity stake than the 10 percent they rejected on Tuesday. They also could get a chunk of equity that was expected to go to the United Auto Workers, which reached a tentative agreement with GM earlier this week on cost-saving contract modifications and payments into a union-run health care trust.

"The potential is there for some kind of deal," said David Cole, chairman of the Center for Automotive Research in Ann Arbor. "The idea of government running an industry is like third-graders teaching college calculus: They could be smart, but they don't know what they're doing."
The tentative UAW deal gives the union up to 20 percent of GM stock --about half as much as initially projected. That leaves the government with up to a 70 percent equity stake in GM.

Cole said the government could give most of that stake -- 40 percent --to satisfy bondholders.
Wall Street reacted negatively Wednesday to the failed bond exchange, sending GM shares down 29 cents, or 20 percent, to $1.15.

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C. Robert Kidder to Become Chairman of Chrysler Group LLC

C. Robert Kidder to Become Chairman of Chrysler Group LLC

Auburn Hills, Mich. , May 20, 2009 - Chrysler LLC today announced that C. Robert Kidder, former Chairman of Borden Chemical Inc. and of Duracell International Inc., will become Chairman of Chrysler Group LLC, once it completes its acquisition of the operating assets of Chrysler LLC and completes a global alliance with Fiat SpA. He will succeed Robert L. Nardelli. "We are most fortunate that Bob Kidder will lead the new company through its transformation," said Nardelli.

"My number one priority has been to preserve Chrysler and the livelihoods of thousands of people who depend on its success. With his broad expertise serving on numerous world-class boards and his accomplished business background, Bob will provide the leadership and strategic counsel that will help to create a strong global competitor moving forward." With more than 40 years of experience, Kidder currently serves on the boards of Morgan Stanley, where he is the lead director, Schering-Plough Corporation, and Microvi Biotech Inc.

He previously has served as Chairman and Chief Executive Officer of both Duracell International Inc. and Borden Chemical Inc. and as director of such companies as Electronic Data Systems Corporation and General Signal Corporation. During his tenure with McKinsey and Co. Inc., Bob worked with a major OEM client in the automotive industry. Bob currently is Chairman and CEO of 3Stone Advisors LLC, an investment firm that focuses on clean-tech companies. He holds an M.S., Industrial Economics from Iowa State University and a B.S., Industrial Engineering from the University of Michigan. He resides with his family in Columbus, Ohio.

“I am pleased to join Chrysler at a time when Chrysler is poised to launch an exciting new era,” said Kidder. "I am confident that Chrysler will emerge from Chapter 11 a lean and powerful competitor, combining its own rich history of innovation with Fiat's technology and expertise to invigorate the American car market and to challenge other car companies around the globe."

Chrysler LLC announced on April 30, 2009, that, as a result of the comprehensive restructuring plan agreed to by many of its stakeholders, it had reached an agreement in principle to establish a global strategic alliance with Fiat to form a vibrant new company. On the same day, Chrysler LLC and 24 of its wholly-owned U.S. subsidiaries also filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in U.S. Bankruptcy Court for the Southern District of New York. Chrysler also filed a motion under Section 363 of the Bankruptcy Code requesting the swift approval by the Court of the agreement with Fiat and the sale of Chrysler's principal assets to the new company.

The benefit of this type of filing is speed. It will allow a leaner new company to emerge in less than 60 days from the time of filing, well positioned for long-term viability. Nardelli, Chrysler's Chairman and CEO since August 2007, announced on April 30 his plan to leave the company following the completion of the transactions. He will return to Cerberus Capital Management LP as an advisor. He said that it was "an appropriate time to let others take the lead in the transformation of Chrysler with Fiat, and I will work closely with all of our stakeholders to see that this new company swiftly emerges with a successful closing of the alliance." As stated in the terms of agreement, upon successful completion of the alliance, a board of directors for the new company will be appointed. The majority of the directors will be independent (not employees of Chrysler or Fiat). The board will select a CEO with Fiat's concurrence.

(Info. Chrysler LLC)

The Ford Story: Ford Integrates More Advanced Technology

Keeping you connected and giving you more control, Ford offers a range of available technology on select 2009 model vehicles. An inside look at features of SmartKey™ and SYNC™, and what drove their development.

Obama: Plan To Regulate Emissions

Visit msnbc.com for Breaking News, World News, and News about the Economy

Obama to Unveil Increased Mileage Standards President Obama is set to propose new mileage standards for vehicles on American roads.

MSNBC reports that new cars and trucks will have to get 30 percent better mileage starting in 2016 under the administration's move to curb emissions tied to smog and global warming. The new requirement will cost consumers an extra $1,300 per vehicle and marks the first time that limits on greenhouse gases will be linked to federal standards for cars and light trucks.

While the 30 percent increase would be an average for both cars and light trucks, the percentage increase in cars would be much greater, rising from the current 27.5 mpg standard to 42 mpg starting in 2016. The average for light trucks would rise from 24 mpg to 26.2 mpg. Advocates of the plan say that it would save 1.8 billion barrels of oil through 2016 and is the environmental equivalent of removing 177 million cars from the road.

California, 13 other states, and the District of Columbia had earlier urged the federal government to let them enact more stringent standards than the federal government's requirements. Sources say the Obama administration plans to phase in the new requirements, beginning with 2011 vehicle models.

For full coverage of Obama's plans to create stricter mileage standards, click here.

Chrysler - FacesNotNumbers

On Tuesday, in front of Chrysler's Sterling Heights Assembly Plant, Detroit radio station WCSX 94.7 FM unveiled a 100-foot "Faces Not Numbers" banner showing 4,000 people, all who are affected by the domestic automotive industry. Morning hosts Jeff Deminski and Bill Doyle intend to take the banner to Washington D.C. on Thursday to raise government support. This event was not sponsored by Chrysler.

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Chrysler's Alliance with Fiat

"Why Fiat Works-Revised"

This video features comments from Bob Nardelli, Chairman and CEO Chrysler LLC, explaining why the proposed alliance between Chrysler and Fiat is good for the companies as well as the country.

THIS VIDEO HAS BEEN REVISED SINCE ORIGINALLY POSTED. PLEASE SEE CHRYSLER LLC STATEMENT BELOW:As a potential result of the ongoing discussions taking place related to the Fiat alliance, Fiat would become an equity holder with the same rights and responsibilities as all other equity holders in a newly restructured company. To clarify, this does not mean Fiat would assume responsibility for any of Chrysler LLC's debt.

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UAW (Site)

Chrysler & Fiat: Reflección

En ésta ocasión deseo dar respuesta al amable comentario de SistemasNormales sobre la alianza Chrysler-Fiat:

"30 Abril, 2009 Un dia tristemente historico para Chrysler, ojala el futuro mejore para esta gran compañia, David ¿Tu que opinas de lo ocurrido?

Saludos." 

Estimado Alex (SistemasNormales), permiteme comentar lo siguiente:

La difícil situación por la que atraviesa Chrysler (Cerberus) en éste  momento NO es una cuestión de los últimos acontecimientos económicos, éstos SI agravaron su situación debido a los  lamentables errores acumulados a lo largo de los años por  decisiones de sus directivos, tanto en lanzamientos de nuevos productos como en comercialización, al no escuchar al mercado automotriz en evolución aunado a lo que quieren los  futuros compradores en sus cocheras.

La triste historia se remonta a Lee A Iacocca a fines de los 70s y su magistral labor al salvar a Chrysler de su inminente quiebra en ese entonces, su liderazgo y conocimiento hizo que tuvieran una nueva era de verdadera evolución y reposicionamiento, más con el tiempo el mercado cambio así como los consumidores, deseando obtener mayor calidad en sus autos, con una mejor eficiencia en combustible, a costos accesibles de mantenimiento, aunado a una muy buena  atención en el área de servicio de los dealers.

La parte lamentable es que Chrysler descuido todo esto, ofreciendo autos que no cumplían con las expectativas del consumidor, la competencia de marcas japonesas si lo hizo y poco a poco empezó a ganar más y más terreno para si mismos, supieron identificar muy bien los deseos del nuevo consumidor y lo dieron en vehículos eficientes a bajo costo, no solo en precios de autos nuevos, si no también en costos de mantenimiento, enfocándose en la parte más crítica de los dealers, el área de servicio, depurándola y eficientandola, el resultado fue un éxito constante y creciente.

Las llamadas Big-3 americanas Ford, GM y Chrysler por su puesto, siguieron viviendo en un feudo medieval de glorias pasadas, ofreciendo vehículos que ellos querían producir sin pensar en lo que los consumidores querían comprar, el resultado, autos aún de 4 cilindros con altos consumos de combustible en comparación con la competencia, calidad de materiales deficiente, costos de refacciones y servicio verdaderamente altos, y una atención por parte de la gente de servicio mediocre, poco seria, y en algunos casos en EE.UU. hasta racista.

Al vivir éstas experiencias los clientes al llegar el momento de cambiar sus autos, emigraron con justa razón hacia quien ofrecía un mejor vehículo dando más por menos dinero, un costo-beneficio satisfactorio, en pocas palabras, consintieron a los autos y a sus dueños, creando una fidelidad real, un ejemplo de ésta evolución fue el legendario Yutaka Katayama “Mr. K” fundador de Datsun en EE.UU posteriormente conocido como Nissan.

Los esforzados y leales trabajadores de las Big-3, son los que están pagando un precio muy alto por los platos rotos en éstos momentos, así como los dealers al tener inventarios sin moverse a costos preocupantes y alarmantes, derivando en despidos y cierres inminentes de concesionarios.

El gobierno de Obama se enfoca en salvar las Big-3, selectiva decisión diría yo, sin pensar en salvar verdaderamente toda la industria automotriz en general establecida en EE.UU y los miles de empleos y familias que dependen directa e indirectamente de la producción y venta de autos.

La alianza Chrysler-Fiat podrá desacelerar la caída de la americana ???, En cuanto tiempo ???, no lo sabemos, lo que si es un echo es que su compra fue de oportunidad, llamándola momento de compradores con chequera abundante, el resultado lo podremos ver al mediano plazo.

Chrysler no tuvo un buen matrimonio con Mercedes, fue al final de su alianza, un lastre pesado para la alemana que la remato para quitarse de encima un problema que se vicio al no producir ganancias sustanciales.

El matrimonio con Fiat será bueno ???  Si se hace cirugía mayor en los directivos de Chrysler, con una mentalidad bien enfocada hacia el consumidor, sus posibilidades podrán ser exitosas, si no se evoluciona iremos viendo desaparecer más concesionarios no solo en EE.UU sino también en nuestro México y el mundo, quedando una empresa Americana con transfusión de sangre Italiana hacia un paciente que vivirá de sus recuerdos en glorias pasadas.

Si se logra posicionar a Chrysler y restructurar sustancialmente todas sus áreas, podrá resurgir como un autentico rival internacional, más este esfuerzo llevará años, no solo en el diseño de nuevos VEHÍCULOS con calidad total, sino para ganar nuevamente la CONFIANZA del consumidor que está verdaderamente dañada desde hace ya varios años, ésto último será una labor titánica que solo el tiempo nos dirá si lo podrán lograr.

AIADA Responds to President's "Buy American" Statement

AIADA Responds to President's "Buy American" Statement

ALEXANDRIA, VA (April 30) – The American International Automobile Dealers Association today responded to a speech in which President Barack Obama asked Americans to buy "American" vehicles as part of our economic recovery.

 

"AIADA objects to President Obama's 'buy American' solution for the auto sector," said AIADA President Cody Lusk. "In today's globalized economy 'buying American' can mean anything from buying a Chevy Avalanche built by Mexican workers in Silao, Mexico to buying a Toyota Camry built by Americans in Georgetown, Kentucky."

 

"The real issue is that every car purchased in America today is a shot in the arm for our economy, a boost for car dealers, who are the cornerstones of communities all across this country, and a win for American consumers who have the opportunity to choose the vehicles that best meet their driving needs. President Obama must recognize that protectionist policies and statements like "buy American" have no place in America's economic recovery."

AIADA (Site)

Under The Pentastar: Chrysler & Fiat

Significant events at Chrysler LLC over the Past Week.


Chrysler & Fiat